Who says commissions are dead?

In the wake of Commonwealth Financial Network's decision last week to cut commission sales on its retirement accounts, multiple independent broker-dealers have capitalized on the moment to say they, by contrast, are sticking with commissions.

Cambridge Investment Group and Cetera Financial Group are the latest firms to land in the pro-commission camp. Cambridge announced its decision publicly today while Financial Planning obtained a copy of an email that Cetera sent its advisers this week, letting them know that it had made the same choice.

Cetera headquarters
Cetera plans to join firms who are keeping commissions on retirement accounts in the wake of the fiduciary rule.

Last week, Ameriprise, Raymond James and Morgan Stanley announced they would continue their commission products in retirement accounts, all in the wake of Commonwealth's announcement. Commonwealth, with 1,650 top-producing advisers, is the first large IBD to say it is cutting out commissions for such accounts and the prediction that the decision could be a watershed is proving out.

The largest firm thus far to say it will do the same is Merrill Lynch, which has more than 14,000 advisers. The wirehouse announced its decision last month.

MUTUAL FUNDS STAYING

Cetera Financial Group told its 9,000 advisers this week that it has "every intention of" keeping commission-based products — including mutual funds — in its qualified accounts.

However, Cetera qualified its assurance to its advisers by noting that important steps must be taken before it can be certain these products can remain in compliance with the Department of Labor's fiduciary rule, which takes effect in April.

The rule allows brokerage firms to offer commission-based accounts under the so-called best interest contract exemption.

"It should be noted," Cetera told advisers, "that many of these products require a level of remediation by the sponsors in order to facilitate sales practices that meet the requirements of the DoL fiduciary rule. We remain confident that most sponsors are working diligently to facilitate such changes in time to meet the April deadline."

SPECIAL TOOLS WILL BE OFFERED

Both Cetera and Cambridge said they will be offering special tools or technology to help advisers assure they are in compliance with the new rule.

“We think every firm should have a unique value proposition while serving the best interests of the investing clients,” Cambridge's President Amy Webber said in a statement. Cambridge has more than 3,000 advisers.

She, too, said that continuing commissions will require more preparation.

"While commission-based retirement accounts will be acceptable at Cambridge, the commissions must be levelized by each predefined investment category so that all similar investment options have the same compensation structure," Webber said in the statement.

Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access

Ann Marsh

Ann Marsh

Ann Marsh is a senior editor and the West Coast Bureau Chief of Financial Planning. Follow her on Twitter at @Ann_Marsh.